Copper has been rallying like crazy in the first part of the year amid a
pickup in global growth, Chinese stimulus measures and concerns over tightness
in global mine supply. Unfortunately, as it’s often the case, the rally
attracted the momentum players, the price got overstretched and we got a big
correction to the downside.

FT reported that stocks in Shanghai warehouses reached the highest level
since 2020 amid tepid demand because of the China’s real estate sector
downturn. Given the high prices reached in the last month, manufacturers held
off from buying as they had an incentive to run down their stockpiles.

FT also added that Chinese copper fabricators have very
recently started buying the metal again, with inventories recording slight
decreases in the past two weeks. All else being equal, if we keep seeing positive growth and maintain the risk-on
sentiment, we could see new highs in the months ahead with the Chinese
officials increasing the policy support if the data was to show some
deceleration.

Copper
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that copper has been experiencing an aggressive correction to the downside
after setting a new all-time high. The price bounced recently on a key level at
4.35 where we can also find the 50% Fibonacci retracement level for confluence.

This is where we can expect
the buyers to step in with a defined risk below the level to position for a
rally into a new all-time high. The sellers, on the other hand, will want to
see the price breaking lower to increase the bearish bets into the 4.00 level.

Copper Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a trendline defining the current bearish trend.
The buyers will want to see the price breaking higher to gain some more
conviction and extend the rally into the 4.67 level where we have also the
38.2% Fibonacci retracement level of the entire correction. If the price gets
there, we can expect the sellers to lean on that level to position for a break
below the 4.35 support with a better risk to reward setup.

Copper Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that the price is rejecting the trendline as the sellers are stepping in
with a defined risk above it to position for a drop back into the support
targeting a break below it. The red lines define the average daily range for today.

Upcoming
Catalysts

Tomorrow we get the US Housing Starts, Building Permits and the latest US
Jobless Claims figures. On Friday, we conclude the week with the US PMIs.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Prior +15.6%
• Market index 210.4 vs 208.5 prior
• Purchase index 146.0 vs 143.7 prior
• Refinance index 552.7 vs 554.7 prior
• 30-year mortgage rate 6.94% vs 7.02% prior

Mortgage applications nudged a little higher in the past week, helped by a further jump in purchase activity. That is offset by a decline in refinancing activity, following the surge higher in that space in the week before. Here’s the trend in the market index:

This article was written by Justin Low at www.forexlive.com.

• China is an important partner in all fields
• But relationship has now become more complex
• We do not want to separate from China
• But being too dependent on one country is a problem

Considering the current fragile state of Germany’s manufacturing sector, it’s not the best time to strain relations with China. That said, China could also do with some help as their own economy has been in limbo since the pandemic. Habeck’s remarks are ones to echo the recent G7 statement but that is something China has grown accustomed to already. At the end of the day, actions speak louder than words.

This article was written by Justin Low at www.forexlive.com.

The USD last week saw a
quick dip across the board following the soft US CPI report as the market priced back in two rate
cuts by the end of the year. The moves were reversed soon after though as we
got a bit more hawkish than expected FOMC decision where the dot plot showed that the Fed expected just one cut for
this year despite the soft US CPI report.

Later on, Fed Chair Powell backpedalled on the projections making them a
bit less worrying as the central bank remains very data dependent. The US
Dollar eventually got supported in the last part of the last week as the risk
sentiment turned more cautious.

The EUR, on the other hand,
got hit hard by the European elections as the political uncertainty
weighed on the sentiment and led to some increase in bonds risk premia and
selloff in European stocks.

The risk sentiment has been
gradually improving this week although we are not out of the woods yet. The Flash
PMIs on Friday will likely be important catalysts in this regard.

EURUSD Technical
Analysis – Daily Timeframe

On the daily chart, we can
see that EURUSD has been pulling back this week after breaking through the key 1.0727
support zone. This is coming amid general US Dollar weakness
as the risk sentiment has been gradually improving. The buyers are gaining a
bit more confidence as the price rallied back above the 1.0727 level.

EURUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a good resistance around the 1.0760 level where we can find
the confluence
of the trendline
and the 50% Fibonacci retracement.

This is where we can expect
the sellers to step in with a defined risk above the trendline to position for
a drop into the 1.06 handle with a better risk to reward setup. The buyers, on
the other hand, will want to see the price breaking higher to increase the
bullish bets into the 1.09 handle.

EURUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that the price has been printing higher highs and higher lows on this
timeframe as the bullish momentum started to pick up amid improving sentiment. The
sellers will want to see the price falling below the swing low at 1.0710 to regain
control and increase the bearish bets into new lows. The red lines define the average daily range for today.

Upcoming
Catalysts

Tomorrow we have the US Housing Starts, Building Permits and the latest US
Jobless Claims figures. On Friday, we conclude the week with the Eurozone and
US PMIs.

This article was written by Giuseppe Dellamotta at www.forexlive.com.